Braden Kelley posted a great transcript of a talk from Jeff Bezos of Amazon recently on Blogging Innovation. Here is one of the sections that I thought was really interesting:
If you invent frequently and are willing to fail, then you never get to that point where you really need to bet the whole company. AWS also started about six or seven years ago. We are planting more seeds right now, and it is too early to talk about them, but we are going to continue to plant seeds. And I can guarantee you that everything we do will not work. And, I am never concerned about that…. We are stubborn on vision. We are flexible on details…. We don’t give up on things easily. Our third-party seller business is an example of that. It took us three tries to get the third-party seller business to work. We didn’t give up.
But. if you get to a point where you look at it and you say look, we are continuing invest a lot of money in this, and it’s not working and we have a bunch of other good businesses, and this is a hypothetical scenario, and we are going to give up on this. On the day you decide to give up on it, what happens? Your operating margins go up because you stopped investing in something that wasn’t working. Is that really such a bad day?
Mike Masnick picked up on this and wrote an interesting response, which includes this:
Bezos’ ability to stand up to investors who regularly called for changes in strategy and to focus on the long-term has really paid off. In this age when “pivot” has become a buzzword in the startup community (there’s even a whole conference on the subject), where companies completely shift strategies on whims, perhaps there’s something to be said for seeing the long term game plan better than others, and sticking to it. Obviously, this doesn’t mean being totally pigheaded if an idea isn’t working, but Bezos’ point is to be flexible on the details, but stay true to the ultimate vision you believe in. That’s really, really tough for a lot of entrepreneurs to do, but it’s a really important lesson to learn.
I was thinking of these two ideas during my Executive Education class today – the two quotes pose an interesting question – when should you give up on an idea?
I’m actually not convinced that the idea of the Pivot is necessarily in conflict with the approach that Bezos is taking. It’s true that some pivots do take a new firm too far away from their original vision, but this doesn’t have to be the case.
Bezos is describing a Little Bets type approach to executing your new ideas. Test a lot of ideas (planting seeds) to see what works. When something gains traction, build on that.
This is one of the few innovation ideas that is easier to execute in a big organisation. When you’re big, you can try out a lot of different ideas, and it’s not such a big deal if some of them don’t work.
However, in a start-up, it’s not so straightforward. Here you basically have one idea, so you need it to work. Still, you have an opportunity to test the various parts of your business model as you go along.
I think that the answer to the question is that you should give up on your ideas easily when you’re still in the idea-testing stage, but then hang on to them stubbornly once you’re trying to get the idea to diffuse.
Giving up on ideas when you’re in testing phase is part of being flexible on the details. You’re still at a point where pivoting makes sense.
However, once you’ve settled on an idea, and shown that it works, that’s the time to hang on – ideas always take longer to spread than we expect.
As with many parts of innovation, the correct choice between flexibility and stubbornness is all a matter of timing.
(Photo from flickr/Neil Wykes under a Creative Commons License)